71 Percent of Major Automotive Stocks Are a HOLD, 29 Percent a SELL

With electricity buzzing in the air, car makers are attempting to top one another with affordable electric, or at least partially electric, cars. Based on our investment ratings, major automaker stocks seem to be in limbo, with 71 percent of major automotive stocks rated a HOLD, waiting for the new invention so it can either shoot up in success or slide down in failure. Here’s how they shakeout:

Toyota has been in the HOLD range since it got downgraded from a B- (BUY) to a C+ (HOLD) in February 2016. It dropped as low as a D- (SELL) in June, but bounced back up to a C rating, which it currently holds.

The company hopes to boost its sales with the 2017 Prius Prime, a plug in hybrid to go on sale within the next few months. The vehicle will be powered by gas and electricity.

GM revealed the 2017 Chevrolet Bolt EV scheduled to go on sale later this year. The Bolt will be an all-electric car with an estimated 238-mile range, a major competitor for Tesla, whose own affordable Model 3 is at least a year away from production.

GM was in the BUY range from April 2014 to February 2016 with one dip to C+ during the period. But, it dropped to a C+ (HOLD) rating at the beginning of March 2016 and currently remains at the HOLD level.

Honda plans to launch Honda Clarity later this year, a hydrogen fuel cell automobile, to compete with the rest of the big players. So far, in 2016, Honda has been a HOLD with a dip in June to a SELL and, as of September 9, it holds a C rating.

Ford’s all-electric Focus already hit the stores, but disappointed with a travel range of about 76 miles per charge. The 2017 model should have an improved 100 miles per charge range, but won’t be in competition with the long range Tesla or GM electric vehicles.

Ford has been a HOLD stock since its downgrade from a B- (BUY) to a C (Hold) in March, 2016.

Daimler AG currently holds a C- rating from Weiss. It dropped from being a BUY stock to a SELL in March of 2016. It has its all electric Mercedes-Benz B-Class, but the vehicle is on the lower end of the spectrum when it comes to the travel range of 87 miles per charge. Way behind Tesla and Chevy.

Tesla made some big promises for its Model 3. But this D (SELL) rated company has struggled to meet deadlines in the past. Questions over the long-term viability of Tesla with profitability, cash flow, and competition all creating challenges despite clearly extraordinary product design are major drags on this stock.

Fiat Chrysler is at the bottom grade of our ratings with an investment rating of E+. It was downgraded from a D- to an E+ in March of 2016. Fiat Chrysler manufactures an all-electric Fiat 500e, but the company’s leadership admitted the vehicle is not profitable. Remaining independent may be a more important agenda item for the board than whether they are competing successfully in the all-electric auto field.

2016 has been a tough year so far for the major automakers competing in alternative energy vehicle production and sales.

Toyota, GM, Honda, Ford, and Daimler stock ratings have all dropped from a BUY to a HOLD early in the year, and remains there in the meantime. Tesla and Fiat Chrysler started the year in the SELL category and currently remain there. Most of them have a new model coming out either later this year, with hopes of boosting sales and leading the market with the greenest and most efficient vehicle.

Keep an eye on these stocks by adding them to your Watchlist and see if the new innovations drive up their investment ratings.

About the Research Analyst

Kelly completed the Series 7 and 66 securities licenses, and has worked in the financial publishing industry for eight years, specializing in income and options. She contributes regularly to the Weiss Ratings Daily Briefing.

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